District VAT Masterfile

February 4, 1991 REVENUE MEMORANDUM ORDER NO. 07-91 SUBJECT : District VAT Masterfile TO : Regional Directors, Revenue District Officers and Others Concerned This Order prescribes the guidelines for the update of District VAT Masterfiles, preparation of Standard VAT Reports and Cancellation of VAT Registration Certificates. I. Identify VAT Registrants A. Clean-out Masterfile 1. Determine the number of VAT registrants, net of cancelled registrations, as of January 31, 1991 by checking a. monthly VAT Collection Report (VCR), b. masterfile, and c. certificates of registration issued. Any discrepancy in the number of registrants reported in (a) VCR, (b) masterfile and (c) certificates of registration issued shall be resolved in favor of the number of certificates of registration issued. 2. Classify the registrants into: Column 1 Registrants (net of cancelled) Column 2 Praying filers (including filers with TCC) Column 3 Filers with even returns (including those with excess input tax credits) Column 4 Filers of zero-rated returns (refer to returns the transactions declared on which are 100% zero-rated or effectively zero-rated) Column 5 Stop-filers (refer to taxpayers who had filed at least one VAT return, but stopped filing for any reason) Column 6 Irregular filers (refer to filers who file returns "off" and "on") Column 7 Newly-registered filers (filing date not yet due) Column 8 Filers of non-transaction returns Column 9 cancelled (refer to registrants cancelled as of January 31, 1991) 3. Steps to be taken a. After sorting out the registrants, check-mark on the tentative masterfile the corresponding column under which each registrant falls. b. Column 3 Identify cases of excess input tax credits or even output/input taxes, such as - the crediting of input taxes attributable to VAT-exempt business to VAT-taxable business; - the volume of zero-rated transactions is greater than taxable transaction; or - capital equipment of substantial amount was purchased during the period; etc. c. Column 5 Visit taxpayer to ascertain cause of stoppage in filing such as those enumerated reasons for cancellation in Section I-B. In proper cases, cancel the VAT registration. However, in cases where the non-filing is due to willful neglect, recommend the business for closure. d. Column 6 Contact taxpayer to ascertain cause of irregular filing of VAT returns. Compel the filing of all unfiled VAT returns and impose the appropriate penalties. If warranted, recommend for the closure of the business. e. Column 8 Verify if taxpayer has in fact failed to commence business. If the period of inactivity exceeds two quarters, notify the taxpayer that his registration is due for cancellation in order to prevent undue sources of input taxes. B. Cancel the registration of a taxpayer 1. Upon retirement from business due to a. death of owner; b. cessation from business; or c. closure of business by other government regulatory agencies. 2. When business became exempt from VAT due to a. issuance of revenue rulings or court decisions; or b. subsequent legislation or passage of special laws or international agreements. 3. When the nature of business changed from VAT taxable to non-VAT taxable, such as from sari-sari store to restaurant, etc. 4. Upon change of ownership in the case of single proprietorship. 5. Upon dissolution of business partnership due to death or withdrawal of one partner. 6. When there is a merger or consolidation with respect to the dissolved corporation(s). 7. When the registrant failed to actually start/commence the business. 8. Upon request for deregistration of business originally exempt under Sec. 103 (a), (b), (c), (f), and (w) or when the expected annual gross sales/receipts of P200,000.00 was not realized; but only after the lapse of two (2) years. cd i 9. When principal place of business has been transferred from one RDO to another (the cancellation should be made effective on the last calendar day of the month). 10. When there is multiple registration (registration is retained at the RDO where the principal place of business is located). 11. When the registrant cannot be located in the place of business given in his application for registration. 12. When the VAT Registration Number given in the certificate of registration does not match the corresponding pregenerated number in the control list; the former should be cancelled and the taxpayer shall be issued a new number from the control list. C. Requirements for Cancellation Each and every cancellation shall only be made upon report submitted to and approved by the Revenue District Officer. Before the registration of a taxpayer is finally cancelled, the VAT liability of the registrant shall have been determined. The applicant shall be required to submit, in proper cases, the following: 1. Original copy of the VAT Registration Certificate. 2. Copies of notice of retirement, deed of sale, deed of assignment, death certificate, agreement or resolution for merger or consolidation, notice of dissolution to SEC of partnership or corporation etc. 3. Quarterly VAT returns, for unverified periods or quarters. 4. Latest financial statements. 5. Inventory of supplies and goods. 6. Inventory of capital goods. After every cancellation of registration, the former registrant shall be notified and required to surrender all unused invoices or receipts. II. Enroll potential VAT Registrants A. Search for potential VAT registrants from 1. telephone directory yellow pages, 2. list of city/municipal taxpayers, 3. registers of business guilds, associations, etc.; 4. list of contractors of the Department of Public Works and Highways and provincial, city or municipal government, 5. list of suppliers of goods and services of the national and the local governments, including government-owned and controlled corporations, 6. records of suppliers and customers of VAT registered or non-VAT taxpayers, 7. 1988 and 1989 income tax returns, 8. 1988 and 1989 Survey List of Businesses, 9. sugar mills for planters and traders 10. others. B. Conduct door-to-door campaign and obtain the following information which may suggest that the taxpayer is a VAT-registrable person: 1. nature of business 2. form of organization (single proprietorship, partnership or corporation) 3. capitalization 4. number of employees 5. amount of office space rental 6. others C. Obtain relevant information on potential VAT taxpayers from provincial and local governments, as well as agencies of the national government in the district. cdt Potential VAT taxpayers identified in (A), (B), and (C) shall be contracted or informed in writing of the requirements for registration. III. Reports A. Prepare and Submit Monthly Reports 1. VAT Collection Report prescribed under RMO No. 9-89 (Annex "A") To be submitted not later than the 25th day of the month in which the quarterly VAT payment is required to be made. 2. Revised Report on Registrants and Filers (Annex "B") To be submitted at the same time as the VCR. 3. List of New Registrants (Annex "C") To be submitted on the 10th day of the following month. 4. Cancellation of VAT Registration (Annex "D") To be submitted on the 10th day of the following month. During the cleaning out of the Masterfile, use the quarterly VCR (Annex "A") to report only the monthly collections. The report of the number of registrants, number of filers and number of non-filers should be made in the Revised Report on VAT Registrants and Filers (Annex "B"). The List of New Registrants (Annex "C") shall be accomplished in duplicate to be distributed as follows: Original VAT Division Duplicate RDO file copy The cancellation of VAT Registration Report (Annex "D") shall be accomplished in duplicate to be distributed as follows: Original VAT Division Duplicate RDO file copy B. The updated masterfile shall be submitted to the VAT Division not later than March 27, 1991. (SGD.) JOSE U. ONG Commissioner